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93
24 S.Ct. 399
48 L.Ed. 629
On May 2, 1894, a decree was entered in the circuit court of the United
States for the western district of North Carolina foreclosing a second
mortgage of the Western North Carolina Railroad Company to the Central
Trust Company of New York, trustee. The property was subject to a first
mortgage to the same trustee, which was not in default. The decree
provided:
'The purchaser or purchasers of the property herein decreed to be sold,' the
Western North Carolina Railroad and its franchises, 'shall be invested with
and shall hold, possess, and enjoy the said mortgaged premises and
property herein decreed to be sold, and all the rights, privileges, and
franchises appertaining thereto, as fully and completely as the Western
North Carolina Railroad now holds and enjoys, or has heretofore held and
enjoyed the same; and further, the said purchaser or purchasers shall have
and be entitled to hold the said railroad and property discharged of and
from the lien of the mortgage foreclosed in this suit, and from the claims
of the parties to this suit or any of them, except the first consolidated
mortgage of September 1st, 1884.'
In pursuance of this decree the Southern Railway Company, a corporation
of the state of Virginia, became the purchaser. On August 22, 1894, the
sale was confirmed, the decree of confirmation providing, among other
things:
'It is further ordered and decreed that the special master is hereby
authorized and directed, on the request of said purchaser, to sign, seal,
execute, acknowledge, and deliver a proper deed of conveyance to the said
Southern Railway Company, conveying to it, all and singular, the railroad,
equipment, property, and franchises so as aforesaid sold under the decree
of this court, free from any and all equity of redemption of the said
Western North Carolina Railroad Company, or anyone claiming by, under,
or through it, except the prior mortgage recited in such decree. Upon the
delivery of such conveyance by the special master the said Southern
Railway Company shall fully possess and be invested with all of the
estate, right, title, and interest in, to, and of such railroad, equipment,
property, and franchises so sold under the decree of this court as the
absolute owner thereof, to have and to hold the same to it and its
successors and assigns forever.
'On August 31, 1894, on exhibition of the deed executed and delivered by
the special master herein ordered, the defendant company is authorized,
directed, and required forthwith to deliver over to the said Southern
Railway Company the possession of all and singular the railroad and
property described in and conveyed by such deed.
'It is also further ordered that by way of further assurance and
confirmation of title to such Southern Railway Company of the property
so by it purchased under the decree of this court, the said The Western
North Carolina Railroad Company, by its proper officers and under its
corporate seal, and the Central Trust Company of New York, trustee,
shall, upon request of said Southern Railway Company, sign, seal,
execute, acknowledge, and deliver to said Southern Railway Company all
proper deeds of conveyance, transfer, release, and further assurance of all
the railroad property and franchises so as aforesaid sold under the decree
of this court and embraced in the deed of the special master, so as fully
and completely to transfer to, and invest in, the said Southern Railway
Company the full legal and equitable title to all such railroad property and
franchises sold or intended to be sold under the decree of this court.'
Afterwards the master conveyed to the Southern Railway Company
'All and singular the railroad of the said Western North Carolina Railroad
Company in the state of North Carolina, extending from Salisbury, in
Rowan county, to and through Statesville, in Iredell county, to Asheville,
on or near the French Broad river Broad river to Paint Rock in Madison
county, Broad river to Paint Rock in Madison county, and also from said
Asheville westward to the Tennessee river at or near the mouth of the
North Carolina Railroad Company. In the answer of the sheriff and of the
administratrices of James and Howard, issue was taken upon the right of
the circuit court to entertain the bill or grant an injunction, and among
other things it was averred:
'3. That these respondents deny the truth of the allegations contained in the
3d section of the supplemental bill of complaint, and while they admit that
the Southern Railway Company took a deed from the master purporting to
convey the said franchises and property subject to the lien of the firstmortgage bonds theretofore issued by the said company, they aver that the
Southern Railway Company, being at the time of said sale not a resident
corporation of the state of north Carolina, and not subject to visitation of
said state, but attempting to do business therein by comity, was not
allowed or authorized by the laws of North Carolina to purchase, or hold,
or operate the Western North Carolina Railroad, or to own its franchise
and property without becoming a domestic corporation, and that, by virtue
of certain laws enacted by the legislature of North Carolina at its session
of 1879, being chapter 10 of the Laws of 1879, re-enacted in the Code of
North Carolina as 1255, no mortgage of the Western North Carolina
Railroad Company, thereafter issued, had the legal effect of exempting the
property or earnings of said company from execution for the satisfaction
of any judgment obtained in the courts of said state against said company
for torts thereafter committed by said company, its agents, or employees,
whereby any person should be killed, or any person or property injured,
'any clause or clauses in such mortgage to the contrary notwithstanding,'
both the first mortgage bonds subject to which the sale of the franchise
and property of said company purporting, under the decree referred to in
the bill of complaint to have been sold, and the second mortgage bonds,
for default in payment of the interest on which the decree of foreclosure
was entered, appear from said record (Exhibit A to said bill of complaint)
to have been issued long after the enactment of said statute in the year
1871, and said statute, since its enactment in 1871, has been the law of the
state of North Carolina, in contemplation of which all railroad companies
created by, and organized under, the laws of said state, have issued all
mortgage bonds, the said statute, as these respondents are advised,
informed, and believe, having entered into and formed a part of every
mortgage bond issued by any railroad corporation operating under the
laws of North Carolina since its enactment in 1871.
'But these respondents deny the truth of the allegation 'that, at the time of
their death (referring to the death of W. A. James and John H. A. Howard)
the Western North Carolina Railroad Company had no interest in the
Western North Carolina Railroad, or the franchises, nor had it any interest
respondents.
Statement by Mr. Justice Day:
Mr. Justice Day, after making the foregoing statement, delivered the
opinion of the court:
The title of the Southern Railway Company to the franchise and property of the
Western North Carolina Railroad Company would seem to be plain, unless
there is something in the North Carolina statutes or judicial determinations
which prevents the foreclosure proceedings from having effect to pass the title.
A railroad company in North Carolina has full authority to mortgage its
franchises and property. N. C. Code, 1957. This power was also given by the
charter of the Western North Carolina Railroad Company. By the foreclosure
proceedings, the title of the Western North Carolina Railroad Company to its
franchise and property, except its mere right to be a corporation, was sold and
the title confirmed in the purchaser. By the law of North Carolina the title to
mortgaged premises is in the mortgagee. The Central Trust Company, the
trustee under the first and second mortgages, was a party to the foreclosure
proceedings. It is estopped to dispute the effect of the decree, sale, and
confirmation, clothing the Southern Railway Company with the full title to the
property and franchise to operate a railroad which had theretofore belonged to
the Western North Carolina Railroad Company. From this record and a
consideration of the litigation that has arisen in the attempt to collect the James
and Howard judgments, it is evident that a conflict exists between the views of
the Federal courts and the supreme court of North Carolina as to the effect of
the foreclosure proceedings to relieve the property purchased at the sale from
levy and execution to satisfy the James and Howard judgments. Such
differences, always to be deprecated, should be approached in a spirit of
fairness and comity, with a view to preventing conflicts of jurisdiction
detrimental to the rights of parties and to the respect and authority due judicial
tribunals. The decision relied upon as justifying the sheriff in the levy of
execution and sale of the property formerly belonging to the Western North
Carolina Railroad Company is James v. Western N. C. R. Co. reported in 121
N. C. 523, 46 L. R. A. 306, 28 S. E. 537, in which case it was held that the sale
of the railroad company's property upon the foreclosure of the second mortgage
did not extinguish the corporate existence of the company nor release it from
liability to the public for the manner in which the property was operated.
Further, that the sale under the decree in the circuit court of the United States
foreclosing the second mortgage did not, under 697, 698 of the Code of
North Carolina, make the purchaser a domestic corporation, and that, in order
to have the effect to dissolve the mortgagor corporation as provided in 697 of
'If this be the correct reading of these sections of the Code, it would seem that
while 697 does say that these facts, ipso facto, dissolved the corporation,
another corporation must be provided, as in 1936 of the Code, to take its
place before it is dissolved; that there must always be a corporation in existence
liable to the public for the duties and obligations assumed by the grantee for the
privileges conferred in the grant of the franchise and that the old corporation
must continue to exist until this is done; and that when the new corporation is
formed it will be a domestic corporation. It cannot be that the legislature ever
intended, by this general legislation, to create a foreign corporation here, when
it could not do so by positive and direct enactment. 119 N. C. 918; 78 Fed. 387,
Judge Dick's opinion in Bradley v. Ohio River & C. R. Co. published in the
appendix. By this view of the case all the interests of the parties may be
harmonized. The 'Southern,' the purchaser of the equity of redemption of the
'Western,' stands in the shoes of that company. The Southern is in effect the
mortgagor in its relations to the 'Central Trust Company of New York,' the
mortgagee of the first mortgage, and being in possession of the road, its
property and franchise, has the right to run and operate the same. But the old
corporation, still in existence, is liable for damages caused by the
maladministration of the Southern, which it allows to run and operate the road.
But the property of this road, which the 'Southern' is allowed to use, will be
held liable to the public for damages. Chollette v. Omaha & R. Valley R. Co.
26 Neb. 159, 4 L. R. A. 135, 41 N. W. 1106; Brunswick Gaslight Co. v. United
States Gas, Fuel, & Light Co. 35 Am. St. Rep. 385, and note on page 390 (85
Me. 532, 27 Atl. 525).
'It therefore follows that, in our opinion, the court below erred in its ruling upon
the third issue. This ruling is reversed, and judgment should be entered for the
plaintiff according to the verdict of the jury.' James v. Western N. C. R. Co. 121
N. C. 523-528, 529, 46 L. R. A. 306, 310, 311, 28 S. E. 537, 538, 539.
This decision of the highest court of the state was made after the rights of the
Southern Railway Company, whatever they may be, had accrued in the
property and franchise of the Western North Carolina Railroad Company, and,
while entitled to the highest respect and consideration, is not conclusive upon
this court in determining the rights secured to the purchaser under the decree of
foreclosure in the Federal court. Burgess v. Seligman, 107 U. S. 20, 27 L. ed.
359, 2 Sup. Ct. Rep. 10.
6
If the North Carolina supreme court can be taken to have held that the property
purchased by the Southern Railway Company at the judicial sale continued
liable for debts thereafter accruing against the Western North Carolina Railroad
Company we are constrained to dissent from such conclusion. Under 697,
North Carolina Code, it is provided that the sale under a deed of trust or
mortgage shall pass not only the works and property of a corporation and those
acquired after the mortgage and before the sale, but all other property of which
it may be possessed at the time of the sale other than debts due it, and 'upon
such conveyance to the purchaser the said corporation shall, ipso facto, be
dissolved, and the said purchaser shall forthwith be a new corporation by any
name which may be set forth in the said conveyance, or in any writing signed
by him, and recorded in the same manner in which the conveyance shall be
recorded.' Section 698 provides that the corporation created by or in
consequence of such sale and conveyance shall succeed to all such franchises,
rights, and privileges, and perform all such duties as would have been or should
have been performed by the first corporation but for such sale and conveyance,
save only that the corporation so created shall not be entitled to the debts due to
the first corporation, and shall not be liable for any debts or claims against the
first corporation which may not be expressly assumed in the contract of
purchase; nor shall the property, franchise, or profits of such new corporation
be exempt from taxation. This, with other provisions of 668, indicate an
intention to clothe the purchaser with all the property of the old corporation,
including the franchise to conduct and operate a railroad, freed from all debts or
obligations of the old corporation.
But these sections, it is said in the James Case, must be read in connection with
701 and 1936 and 2005, referred to in 701. They are set forth in the
margin.*
And it is said, as the result of these provisions, that, unless the purchaser shall
organize a new domestic corporation to take the place of the old corporation,
the property continues liable, though in the hands of the purchaser, upon a
cause of action asserted against the old corporation for the conduct of the new
owner, and this in actions to which the purchaser is not a party, and whose
knowledge of the suit and judgment may come with the seizure of the property
to satisfy the judgment. For, it is said, 'there must always be a corporation in
existence liable to the public for the duties and liabilities assumed by the
grantee for the privileges conferred in the grant of the franchise.' This
reasoning, it seems to us, assumes that the franchise to operate the road did not
pass by the sale, unless such new domestic corporation is organized. As we
have seen, the North Carolina statutes authorize the conveyance by mortgage of
the property and the franchise to use and operate it. The decree of foreclosure
undertakes to sell, and the confirmation to secure the purchaser in the use and
enjoyment of, the property. The power given to mortgage the franchise of the
corporation must necessarily include the power to bring it to sale with the
property to make the sale effectual as a means of transferring the right to use
the thing conveyed. New Orleans, S. F. & L. R. Co. v. Delamore, 114 U. S.
501, 29 L. ed. 244, 5 Sup. Ct. Rep. 1009.
9
It is true the right to be a corporation is not sold. By the statute the corporation
is declared to be dissolved by the sale, and under other sections of the North
Carolina Code its affairs are to be wound up. But the franchise to operate and
use the property has passed at the sale, and must have done so to make the
purchase of any value. This principle, recognizing the distinction between the
mere right or franchise to be a corporation and the franchise of maintaining and
operating the railroad, was distinctly pointed out by Mr. Justice Matthews in
Memphis & L. R. R. Co. v. Railroad Commissioners, 112 U. S. 619, 28 L. ed.
841, 5 Sup. Ct. Rep. 303:
10
The Southern Railway Company was authorized by its charter, among other
things, to purchase or otherwise acquire the property of any railroad company
organized under the laws of another state. We have been cited to no statute of
the state of North Carolina forbidding the purchase of a railroad at foreclosure
sale by a corporation of another state. It is said that the state requires a
domestic corporation organized under, and subject to, its laws to become the
purchaser of a railroad under the North Carolina statutes already cited. But the
Southern Railway Company, in purchasing a franchise granted by the state of
North Carolina, and undertaking to operate a railroad within the state, is subject
to regulation by the law of the state. Runyan v. Coster, 14 Pet. 122, 10 L. ed.
382; American & Foreign Christian Union v. Yount, 101 U. S. 352-354, 25 L.
ed. 888-890. This principle is not qualified because the right of removal of suits
for diverse citizenship still exists, as was held in Southern R. Co. v. Allison, 190
U. S. 326, 47 L. ed. 1078, 23 Sup. Ct. Rep. 713. It is urged that the supreme
court of North Carolina, by a course of decisions antedating the mortgage and
foreclosure, had established the rule of law contended for as to the continuing
liability of a railroad corporation unless a domestic corporation is organized to
own and operate the property. We have examined these cases and do not find
such to be the ease. The supreme court of North Carolina had held a lessor
liable for the conduct and management of the lessee, and in Pierce v. North
Carolina R. Co. 124 N. C. 83, 44 L. R. A. 316, 32 S. E. 399, decided in March,
1899, that court said:
12
'The motion to dismiss the complaint and for judgment of nonsuit appears from
brief of defendants' counsel to be intended to raise again the question whether
the lessor company, The North Carolina Railroad Company, the defendant
herein, is liable 'for all acts done by the lessee in the operation of the road,' as
was held in Logan v. North Carolina R. Co. 116 N. C. 940, 21 S. E. 959, but
why the counsel should feel 'encouraged to believe' that this court will retire
from the position it has taken upon the question, we are not advised. We have
perceived no lack of 'soundness of reasoning' therein. The decision in Logan's
Case was made after full deliberation and with full appreciation and careful
discussion of the important principle now again called in question, and it was
held that 'a railroad company cannot escape its responsibility for negligence by
leasing its road to another company, unless its charter or a subsequent act of the
legislature specially exempts it from liability in such case,' and it was made in
an action to which the appellant herein was the party raising the question. The
same proposition had been theretofore laid down by Smith, C. J., in Aycock v.
Raleigh & A. Air Line R. Co. 89 N. C. at page 330, with cases there cited, and
Logan's Case upon this point has been expressly cited and sustained in Tillett v.
Norfolk & W. R. Co. 118 N. C. at page 1043, 24 S. E. 113; James v. Western N.
C. R. Co. 121 N. C. at page 528, 46 L. R. A. 310, 28 S. E. 538; Benton v. North
Carolina R. Co. 122 N. C. 1007, 30 S. E. 333, and Norton v. Carolina C. R.
Co. 122 N. C. at pages 936, 937, 29 S. E. 894. In the last two cases this point
was again held against the same corporation, which is the appellant in this case;
the verdicts were for considerable sums, and in Norton's Case the defendant
was represented by the same counsel as in the present case.'
13
But this is far from holding that in the case of a sale the corporate property shall
remain liable for the debts of the old corporation in suits against it until a new
domestic corporation is organized to take the place of the old one. The cases
cited hold the lessor to a continued liability, notwithstanding a lease. In the case
in hand the property and franchise have been sold, and there is no contractual
relation between the companies nor permissive operation of the road by the new
company.
14
Nor can we see any room for the application of 1255 of the North Carolina
Code, making liens for judgments for torts superior to mortgages of
incorporated companies. In this case the tort was committed after the judgment
debtor had parted with all its property and there was nothing for such judgment
to operate upon. Jeffrey v. Moran, 101 U. S. 286, 25 L. ed. 786.
15
shows that he has levied upon all this property, said to be of the value of five
millions of dollars, to pay these judgments of twenty thousand dollars.
16
It is not claimed that the Western North Carolina Railroad Company acquired
the property by any new title, but in effect it is sought to annul the order and
decree of the Federal court because it has not operated to transfer the title to the
purchaser. Examining the decree under which this property was sold, we find
certain provisions which are important in this connection. It is provided: 'The
purchaser or purchasers at said sale shall, as part of the consideration for such
sale, take the property purchased upon the express condition that he or they, or
his or their assigns approved by the court, will pay off and satisfy any and all
claims filed in this cause, but only when the court shall allow such claims and
adjudge the same to be prior in lien to the mortgage foreclosed in this suit, and
in accordance with the order or orders of the court allowing such claims and
adjudging with respect thereto, and the purchaser or purchasers, or their
approved assigns, shall be entitled to appeal from any and all orders or decrees
of the court in respect to such claims or any of them, and shall have all the right
in respect to such appeals which the complainant Central Trust Company of
New York would have in case such appeals had been taken by it. The purchaser
or purchasers at said sale shall also, as part of the consideration, in addition to
the payment of the sum or sums bid, take the property purchased upon the
express condition that he or they, or his or their assigns approved by the court,
will pay off and satisfy all debts or obligations incurred or to be incurred by the
receivers having possession of such property which have not been, or shall not
be paid by said receivers, and which shall be adjudged by the court to be debts
or obligations properly chargeable against the property purchased, and to be
prior or superior to the lien of the mortgage foreclosed in this suit.
17
'The court reserves the right to retake and resell said property in case of the
failure or neglect of purchaser or purchasers, or his or their assigns approved by
the court as aforesaid, to comply with any order of the court in respect to
payment of prior lien claims above mentioned within twenty days after service
of a copy of such order upon said purchaser or purchasers, or his or their
assigns,'
18
19
'Thereupon the court orders and decrees that the said report of the special
master be spread at large upon the record, and be in all things approved, and
the sale made by him to the said Southern Railway Company, being all and
singular the railroad, equipment, property, and franchises of the Western North
Carolina Railroad Company as described in and by the decree of foreclosure
entered in this cause on May 5, 1894, at and for the sum of five hundred
thousand dollars ($500,000) by it bid, be and the same is in all things ratified,
approved, confirmed, and made absolute, subject, however, to all the
mortgages, receivers' debts and preferential claims, and to all equities reserved,
and to all and singular the conditions of purchase as recited in said decree, and
the continued right of the court to adjudge and declare what receivers' or
corporate debts are prior in lien or in equity to the lien of the mortgage herein
foreclosed, or ought to be paid out of such proceeds of sale in preference to the
bonds secured thereby. And this court expressly reserves for future
adjudication, and power thereby to bind the property sold, all liens and claims
and equities specified in, and reserved by, the said final decree of foreclosure so
as aforesaid entered on May 5, 1894.
20
'And the court accepts the said Southern Railway Company as the purchaser of
all and singular the railroad property and franchises sold under the decree in
this cause, and holds it obligated as such purchaser to complete and fully pay its
said bid and to comply with all the orders of the court heretofore entered, or
hereafter from time to time to be entered by it obligatory on such purchaser.
And the court reserves full power, notwithstanding such conveyance and
delivery of possession, to retake and resell the property this day confirmed to
such purchaser, if it fails or neglects fully to complete such purchase and
comply with the orders of court in respect to the full payment and performance
of its bid, or to pay into court in accordance with such decree of sale all such
sums of money hereafter ordered by the court to be paid into its registry to
discharge any and all such debts, liens, or claims as it may decree ought to be
paid out of the proceeds of sale in preference to the mortgage of the Western
North Carolina Railroad Company herein foreclosed.'
21
It is obvious that by this decree of sale and confirmation it was the intention
and purpose of the Federal court to retain jurisdiction over the cause so far as
was necessary to determine all liens and demands to be paid by the purchaser. It
accepted the purchaser and thereby made it a party to the suit. Blossom v.
Milwaukee & C. R. Co. 1 Wall. 655, 17 L. ed. 673. The court reserved the right
to retake the property if necessary to enforce any lien that might be adjudged
against the same. On the other hand, the purchaser agreed to pay only such
demands as the circuit court might declare and adjudge to be legally due, with
the right of appeal from such judgment. These provisions make apparent the
purpose of the court to retain jurisdiction for the purpose of itself settling and
determining all liens and demands which the purchaser should pay as a
condition of security in the title which the court had decreed to be conveyed. If
the sheriff is allowed to sell the very property conveyed by the Federal decree,
such action has the effect to annul and set it aside, because, in the view of the
state court, it was ineffectual to pass the title to the purchaser. In such case we
are of opinion that a supplemental bill may be filed in the original suit with a
view to protecting the prior jurisdiction of the Federal court and to render
effectual its decree. Central Trust Co. v. St. Louis, A. & T. R. Co. 59 Fed. 385;
Fidelity Ins. Trust & S. D. Co. v. Norfolk & W. R. Co. 88 Fed. 815; State Trust
Co. v. Kansas City, P. & G. R. Co. 110 Fed. 10.
22
In such cases, where the Federal court acts in aid of its own jurisdiction and to
render its decree effectual, it may, notwithstanding 720, Rev. Stat. (U. S.
Comp. Stat. 1901, p. 581), restrain all proceedings in a state court which would
have the effect of defeating or impairing its jurisdiction. Sharon v. Terry, 13
Sawy. 387, 1 L. R. A. 572, 36 Fed. 337, per Mr. Justice Field; French v. Hay,
22 Wall. 250, 22 L. ed. 857; Dietzsch v. Huidekoper, 103 U. S. 494, 26 L. ed.
497.
23
Nor is it an answer to say that these judgments were for causes of action arising
subsequent to the confirmation of sale. The Federal court by its decree reserved
the right to determine what liens or claims should be charged upon the title
conveyed by the court, and by the levy and sale to pay these judgments the title
is charged with other liens, established in another court, in a proceeding to
which the purchaser was not a party. The Federal court, in protecting the
purchaser under such circumstances, was acting in pursuance of the jurisdiction
acquired when the foreclosure proceedings were begun.
24
In Re Farmers' Loan & T. Co. (original) 129 U. S. 206-213, 32 L. ed. 656, 657,
9 Sup. Ct. Rep. 265, 266, Mr. Justice Miller said: 'But the doctrine that, after a
decree which disposes of a principal subject of litigation and settles the rights of
the parties in regard to that matter, there may subsequently arise important
matters requiring the judicial action of the court in relation to the same property
and some of the same rights litigated in the main suit, making necessary
substantive and important orders and decrees in which the most material rights
of the parties may be passed upon by the court, and which, when they partake
of the nature of final decisions of those rights, may be appealed from, is well
established by the decisions of this court.'
25
We think this case belongs to the class instanced by the learned justice, and that
the circuit court, by the order made, retained jurisdiction of the case to settle all
claims against the property and to determine what burdens should be borne by
the purchaser as a condition of holding the title conveyed. In such cases the
jurisdiction of the court may be invoked by supplemental bill or bill in the
nature of a supplemental bill, irrespective of the citizenship of the parties.
Freeman v. Howe, 16 L. ed. 749-752, 24 How. 450-460. The authorities are
27
We find no error in the judgment of the Circuit Court of Appeals, and the same
is affirmed.
Sec. 701. This chapter, unless otherwise declared herein, or in the chapter
entitled railroads and telegraphs, shall apply to all corporations, whether
created by special act of assembly, by letters of agreement under this chapter, or
by the chapter entitled railroads and telegraphs. And this chapter and the
chapter on railroads and telegraphs, so far as the same are applicable to railroad
corporations, shall govern and control, anything in the special act of assembly
to the contrary notwithstanding, unless in the act of the general assembly
creating the corporation the section or sections of this chapter, and of the
chapter entitled 'Railroad and Telegraph Companies,' intended to be repealed,
shall be specially referred to by number, and as such specially repealed.
Sec. 1936. There shall be a board of six directors and a president of every
corporation formed under this chapter, to manage its affairs; and said directors
and president shall be chosen annually by a majority of the votes of the
stockholders voting at such election, in such manner as may be prescribed in
the by-laws of the corporation, and they may and shall continue in office until
others are elected in their places. In the election of directors and president each
stockholder shall be entitled to one vote personally or by proxy on every share
held by him thirty days previous to any such election, and vacancies in the
board of directors shall be filled in such manner as shall be prescribed by the
by-laws of the corporation. The inspectors of the first election of directors shall
be appointed by the board of directors named in the articles of association. No
person shall be a director or president unless he shall be a stockholder owning
stock absolutely in his own right and qualified to vote for directors at the
election at which he shall be chosen; and at every election of directors the
books and papers of such company shall be exhibited to the meeting if a
majority of the stockholders present shall
require it. And whenever the purchaser or purchasers of real estate, track, and
fixtures of any railroad corporation which has heretofore been sold or may be
hereafter sold by virtue of any mortgage executed by such corporation or
execution issued upon any judgment or decree of any court shall acquire title to
the same in the manner prescribed by law, such purchaser or purchasers may
associate with him and them any number of persons, and make and
acknowledge and file articles of association as prescribed in this chapter; such
purchaser or purchasers and their associates shall thereupon be a new
corporation, with all the powers, privileges, and franchise, and be subject to all
the provisions of this chapter.
Sec. 2005. When any railroad corporation shall be dissolved, or its property
sold and conveyed under any execution, deed of trust, mortgage, or other
conveyance, the owner or purchaser shall constitute a new corporation, and the
property, franchise, and profits of said new corporation shall be taxed as other
like property, franchise, and profits are rated.